27 October 2016

Maersk involved in illegal toxic waste trafficking

Contaminated North Sea oil production and storage tanker ends up on the beach in Bangladesh

Brussels, 27 October 2016 - The Maersk-owned floating oil production and storage tanker, North Sea Producer, left the UK in May 2016 and was directly towed to Bangladesh, where it arrived on 14 August 2016. Two days later, the North Sea Producer was beached at the Janata Steel shipbreaking yard in Chittagong. The vessel is likely to contain large amounts of highly contaminated residues including NORM (natural occurring radioactive material). It is currently being torn apart on a tidal beach, sadly known for the human rights abuses and environmental pollution caused by substandard shipbreaking. The tanker’s export from the UK for demolition in Bangladesh was illegal under the European Waste Shipment Regulation. The NGO Shipbreaking Platform calls on the UK Government to hold the Maersk-owned North Sea Production Company responsible for illegal trafficking in hazardous waste [1].

The case has recently been high up on the agenda of Danish media [2], prompting both policy makers and investors of Maersk, including Nordea, and pension funds PFA and KLP, to react. Whilst Maersk claims that they sold the vessel for further operational use, they have so far been unwilling to reveal which company from the oil and gas sector bought the vessel and claimed to be able to operate it. Taking the current market conditions into account, it was highly unlikely that Maersk was able to find a new owner for the North Sea Producer within the oil and gas sector.

The North Sea Producer was owned and operated by UK-based North Sea Production Company, a joint venture between Danish Maersk and Brazilian oil & gas company Odebrecht, with 50% ownership each. Having operated in the North Sea as an FPSO [3], the vessel is likely to contain large amounts of residues that are contaminated by NORM and sulphur in addition to the various other hazardous materials in its structure and tanks. The Bangladesh shipbreaking yards are not equipped with any infrastructure that could safely remove and dispose of such toxic wastes. The North Sea Producer was allowed into Bangladesh based on a fake certificate stating that the tanker did not contain any hazardous materials. The import of end-of-life ships containing hazardous waste into Bangladesh is banned, but circumvented with such false documents.

“After the recent revelations on Maersk’s shipbreaking practices in India, we also had to learn that Maersk shamefully exposes workers in Bangladesh to enormous risks,” said Patrizia Heidegger, Executive Director of the NGO Shipbreaking Platform. “If Maersk sells a contaminated old oil tanker to an anonymous post box company in the Caribbean under the pretense of further operation use, this is at best a total failure of due diligence, if not punishable negligence. We expect the UK authorities to hold all involved companies responsible for illegal hazardous waste trafficking.”.

In late April, local newspapers wrote about the sale of the North Sea Producer. The North Sea Production Company was quoted as still being the owner and soon to strike a deal of which the details were confidential. Later, the newspapers stated to have been informed that the FPSO would be reused at the Tin Can Island Port in Nigeria. However, when the ship left Teesport, UK, on 17 May it sailed straight to Bangladesh, with only a few fuel stops for the tug boat Terasea Hawk on its way. Its first stop was in Namibia – way beyond the stated destination in Nigeria.

“It is highly likely that the North Sea Production Company sold the ship directly to cash buyers GMS (Global Marketing Systems), via an anonymous post box company in St. Kitts and Nevis. GMS is one of the world's largest companies that specialises in selling end-of-life tonnage to the beaching yards in South Asia,” says Patrizia Heidegger. “While GMS has recently been extremely busy in polishing its image with claims of ‘green ship recycling’, the company’s track record – and obvious continued practice – tells another story. GMS continues to strike deals with some of the worst shipbreaking yards in the world, including those in Bangladesh where hazardous waste management capacity is completely absent, where illegal child labour persists, and where workers are killed or maimed in accidents that could have been avoided.”.

A Saint Kitts and Nevis-based postbox company, Conquistador Shipping Corporation, [3] became the new registered owner of the ship during its last voyage. Contracts for the vessel with Janata Steel shipbreaking yard were signed with the help of a Chittagong-based agent. It is likely that GMS is behind Conquistador Shipping Corporation which is used for last voyage ship registration. GMS has been involved in similar cases before, such as in 2012 when they used anonymous post box companies in Panama and the end-of-life flag of Belize to illegally export two French ferries, SeaFrance’s Cézanne and Renoir, from France to India.

In the coming years a high number of vessels, including semi-submersible platforms, used by the oil and gas sector operating in the North Sea will be decommissioned. Some of these structures have already ended up on the South Asian beaches for breaking under conditions that are both dangerous and polluting.

“We are asking governments to effectively prevent any future illegal waste trafficking as we have seen with the case of the North Sea Producer. The large number of vessels and structures used in the North Sea that will need to be decommissioned in the coming years should prompt public strategies for the creation of jobs in the EU that promise the environmentally sound recovery of valuable resources,” says Patrizia Heidegger. 


[1] The Platform has send a letter to the UK Environment Minister on 25 October.

[2] In addition to the Danwatch report, see also coverage in Danish TV2 and Politiken.

[3] The North Sea Producer was used as an oil and gas floating production storage and offloading (FPSO) vessel in the North Sea at the MacCulloch oil field, 250km north-east of Aberdeen, for ConocoPhillips. When the MacCulloch field was closed, the FPSO was brought to Teesport in Middleborough.

[4] Conquistador Shipping Corporation is domiciled at P.O. Box 583, Morton House - Government Road Charlestown, Nevis. Offshore leaks documentation clearly indicated this is a typical post box company address. See also this link. In order to disguise their involvement in the sale of end-of-life vessels, cash buyers usually use anonymous post box companies, often located in the state whose flag of convenience is used for the last voyage. Similarly, the contracts with the local shipbreaking yard, or papers for the authorities, are signed by local agents so that the name and signature of the cash buyer does not appear on any document.


Patrizia Heidegger
Executive Director
NGO Shipbreaking Platform
+32 2 609 44 19

Source: NGO Shipbreaking Platform. 27 October 2016

The EESC calls for a financial instrument to end “beaching”

Have you ever heard about beaching? It is not a relaxing outdoor sport or a fun internet game. On the contrary, behind this innocent-sounding word hides one of the harshest and most dangerous jobs in the world: shipbreaking on beaches in India, Bangladesh or Pakistan, where regulatory mechanisms are weak, ignoring basic safety rules, where labour force is cheap and respect for the environment barely non-existent. Unskilled workers – many of them under 18 – cut up these coffin-like vessels for an estimated 3 € for a 12 to 16 hour working day. Shipbreaking is the dismantling of end-of-life ships with the aim of recycling its materials.

EU has a moral responsibility to protect workers’ rights also outside Europe
“We have to end this dangerous work, which not only exploits the poorest, but also puts their life in danger on a daily basis. It is the EU’s moral duty to defend workers’ basic rights abroad too”, said Martin Siecker, rapporteur of the European Economic and Social Committee (EESC)’s own-initiative opinion on Shipbreaking and the recycling society, which was adopted on 19 October at the EESC’s plenary.

EU ship owners control around 40% of the world’s merchant fleet and account for around one third of the end-of-life tonnage beached in sub-standard yards in South Asia. Every year around 1,000 large ocean-going vessels are sold for dismantling. Over two thirds of these end-of-life ships end up on beaches in the above mentioned countries.

Tightening up regulation through economic instruments
The EESC urges the Commission to come up with more rigorous legislation that recognizes ship owners’ responsibility and duty to dispose of their ships in a decent way. The ‘polluter pays principle’ should also be applied to ship-owners and the EU has a particular responsibility to eliminate the abuses of irresponsible and inhuman ship dismantling, argues the EESC, calling for an economic instrument which can guide developments in the desired direction. “If Europe wants its ships to be scrapped in a responsible way, it is reasonable that it should ensure that the cost of doing so is integrated into the operating cost of the vessel”, said Richard Adams, co-rapporteur of the EESC opinion.

And the impact on ship owners will be modest: A recent study on a ship recycling licence (SRL) published by the European Commission shows that adding a mere 0.5 % to the operating costs of smaller ships and around 2% for larger categories would be enough to change the behaviour of 42% of ship owners, while a further rate increase or a shortening of the proposed capital accumulation would raise this percentage to 68%, and in the long run 97% of ships calling at EU ports would be dismantled in a proper way.

Several attempts have been made to enforce ship owner responsibility for coffin ships, but with little or no success, such as the International Maritime Organisation (IMO)’s Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC) and its International Ship Recycling Trust Fund. In the EU, the search for an effective solution has been on the agenda for many years. With the EU Ship Recycling Regulation (EU SRR), which will be applicable at the latest in 2018, the Commission is setting high standards for ship recycling facilities, but ship-owners can easily circumvent this regulation by transferring ownership or simply flagging out of the EU. With the financial instrument proposed by the EESC, however, ship owners could be prevented from abdicating their responsibility because if their ships are not dismantled in a facility that is on an EU approved list they cannot reclaim the money and have to pay a price.

A new industry for maritime areas
While the majority of ship recycling would probably still take place in countries with low labour costs, it would at least then happen under better working and environmental conditions. But sustainable ship recycling could also be profitable for Europe. Given the scarcity of raw materials and their high and volatile prices, an industry specializing in recycling end-of-life ships could generate growth and jobs in particular in maritime areas and help to reduce the import balance of raw materials.

Source: Hellenic shipping news. 27 October 2016

26 October 2016

Maersk in hot water for sending ships to notorious scrapping beaches:

Beaches are for relaxing, not oppression (photo: offthebeach.org)

While outwardly against the procedure, 14 ships of its ships were being broken up on open beaches in India and Bangladesh.

The Danish oil and shipping company Maersk finds itself in turbulent seas following the revelations that 14 of its ships were scrapped on notorious beaches in Bangladesh and India in 2013 and 2014.

Outwardly, the company blasted the use of the scrapping beaches, but meanwhile it was reportedly earning money by pushing a German shipping company to try and get the best steel price at the very same beaches for 14 of its ships, according to confidential contracts Politiken, TV2 News and DanWatch are in possession of.

“In this agreement we can clearly see that our influence has gone in the wrong direction, and that form of influence is not commendable. It’s something we really shouldn’t be doing.” Trond Westlie, the CFO of Maersk, told Politiken.

Maersk negotiated with the German company MPC Capital about ending a contract regarding the 14 ships that Maersk had chartered from them.

Germans under duress
Maersk wanted to take the ships off the market to be scrapped, and as part of the contract MPC was under commitment to get the highest possible price per tonne of scrapped steel. That pushed the Germans towards the notorious scrapping beaches.

Of the 14 ships, 11 were broken up on an open beach in India, while the remaining three were scrapped in Bangladesh.

It’s not the first time that Danish ships have been found on the contentious scrapping beaches, which employ impoverished workers in dangerous conditions for pay that can be as low as 2.5 kroner an hour.

According to ship scrapping watchdog website offthebeach.org in 2014, 11 Danish shipping companies and subsidiaries sent 18 ships to be scrapped at the notorious scrapyards in India, Pakistan and Bangladesh from 2010-2014.

Source: cph post. 17 October 2016

EU wants to stop Danish shipping giant from scrapping its ships in India

Only Brussels-approved salvage yards could be used under new rules

Beach scrapping yards are dangerous and dirty (photo: Stéphane M Grueso )

A set of rules coming into force in 2017 would require all ships flying European flags to use only salvage yards approved by the EU.

That list would not include the yards on Alang beach in India where ships are scrapped directly on the open beach. The beaches are notorious for dangerous working conditions where underpaid workers with basic tools are responsible for the dismantling of the old ships.

“We must stop the intense lobbying from Maersk, the largest shipping company in the world,” SF’s Margrete Auken told DR Nyheder.

“We must enforce EU legislation that EU ships should be scrapped under circumstances that take into account the environment, the marine environment and the working environment. That does not include open beaches.”

Not approved
Five salvage yards on Alang have applied to be on the EU’s white-list, including the Shree Ram yard where two Maersk ships are currently being dismantled. Auken said that she and her fellow MEPs would not approve the Alang yards.

“I want to make sure that the commission stands firm on EU legislation and does not plan to accept Maersk’s desire that beaches can be used to scrap ships.”

Auken said that beach scrapyards were “exploding” with hazardous waste and appalling working conditions, and that approving them would “undo all of the progress we have achieved in the past 20 years”.

Maersk to present its case
Maersk has previously been quoted as saying it would consider reflagging its ships to non-EU countries if the best yards on Alang are not white-listed.

“There is a need to find a global solution that is sustainable environmentally, occupationally and commercially,” Maersk said in a written comment.

The company will present its case concerning ship salvaging in November in Brussels.

Source: CHP Post. 26 October 2016

Major shareholder deems Maersk declaration "unduly aggressive"

Two major shareholders voice criticism of Maersk's declaration to disregard EU shipbreaking rules. Nordea Wealth Management wants to know why Maersk refuses to comply with EU regulations, scheduled to take effect in 2017, and Norway's KLP calls the stance "unduly aggressive".

Maersk Line's rejection of EU regulations for responsible ship recycling came as such a surprise to one of the carrier group's major shareholders that an explanation is now being demanded from Maersk. On Thursday afternoon, Maersk held an orientation for several critical shareholders who wanted to know why some of Maersk's vessels ended up on the beaches of Bangladesh a few years ago, at a time when the Danish carrier was otherwise publicly against the controversial beaching method of shipbreaking.

Nordea Wealth Management was among the critics along with Danish pension funds PFA and ATP. But one thing is how Maersk has handled scrapping policy thus far, and another thing is how the world's largest container carrier will handle it going forward, now that the global fleet is in serious need of scrapping due to the crisis in the industry.

The European Union is preparing regulations that mean all vessels flagged in Europe must use shipbreaking facilities approved by Brussels. The rules take effect in 2017, but Maersk Line has already stated to ShippingWatch that the carrier will re-flag vessels if necessary, referring to the possibility that EU regulations will block Maersk from using scrapping yards in Alang in India where the carrier is now having its first two vessels dismantled.

Shortly after major shareholders attended Maersk's orientation yesterday, Sasija Beslik, Head of Sustainable Finance at Nordea Wealth Management, said to ShippingWatch:

"We understand that the company evaluates the situations ship by ship and in relation to the value of each ship. Our stance is that companies must follow the laws and regulations applicable in the countries of operation, and that companies must continuously try to maintain minimum requirements within environmental and social issues. We would like more information about the out-flagging of vessels due to EU regulations."

On top of Nordea Wealth Management's criticism yesterday, Norwegian asset manager KLP Kapitalforvaltning is now voicing its opinion on the matter as well.

"I'm surprised about this stance from Maersk. It seems unduly aggressive when the EU list of approved yards and shipbreaking facilities has not even been presented yet. The question is whether the facilities used by the company in Alang will meet the EU requirements for responsible ship recycling and thus gain a spot on the list. This is what Maersk should focus on, instead of preemptively threatening to re-flag. This was not something we discussed yesterday, when Maersk presented its explanation for the scrapping that has taken place in Bangladesh and India, but I'm curious to hear what Maersk has to say about it," says Annie Bersagel, consultant on responsible investing at KLP, to ShippingWatch.

Individual decision for each vessel
Already at the end of May, Maersk Group's Head of CSR, Annette Stube, told ShippingWatch that Maersk would not acknowledge the EU regulations if they were an obstacle to the carrier's scrapping plans:

"This is something we will consider from case to case, but it is clear that if it is a flag from Denmark or another EU country which hinders our ability to use the yards in Alang, which we believe deliver a responsible shipbreaking service, then we will consider changing the flag," as she said.

This was one week after the 20-year-old container ship Maersk Wyoming arrived at the mudbanks of Alang to be dismantled and ultimately sold as scrap steel, for better prices than Maersk could earn at its previously used yards in Turkey and China. This was just the first in a long line of vessels that Maersk Group will now send to Indian shipbreaking facilities after having banned Alang for many years.

Maersk considers flagging out ships in response to EU rules

The four yards that Maersk now deems to be sufficiently up-to-par also include the yard Shree Ram, which is the scrapping facility on the beach where Maersk Wyoming is being dismantled. All four yards comply with the Hong Kong Convention and have been certified by classification companies but it is far from certain that the EU will include them on its approved list.

Maersk is working to get many of the world's large container carriers to take its lead and support the decision to utilize the Hong Kong-certified yards in India. One of its major competitors, the world's fourth-largest container carrier, Hapag-Lloyd, is of the opposite opinion, however, and plans to comply with the EU's upcoming regulations, the carrier told ShippingWatch this Monday.

Taking responsibility
In Danish daily Politiken Tuesday, Maersk explains that the company will handle the scrapping of vessels itself if these ships are no longer profitable to operate, in order to make sure that vessels sold for scrap are dismantled responsibly. The company has furthermore presented a document to Politiken stating that recycling will only be done according to Maersk's own recycling rules, which set a series of requirements in terms of ensuring responsible scrapping.

"We are actively working directly with shipbreaking facilities in Alang in India in an effort to improve conditions there and to influence the industry. It is therefore of course disappointing that we, in spite of these initiatives, see examples of having pushed parties in the opposite direction of our own policy. Going forward, we will ensure that there is a very strong incentive for responsible recycling in our sales contracts," Chairman Michael Pram Rasmussen tells Politiken.

ShippingWatch asked the two other major shareholders, PFA and ATP, for a comment yesterday on Maersk's rejection of EU regulations, but they have not yet responded.

Source: shipping watch. 21 October 2016